Communist Party of Australia

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Issue #1599      June 26, 2013


Holden heads the wage-cutting charge

Transnational corporations have sniffed an opportunity. For a long time they have been speeding up production, trimming their workforces, and quietly moving more and more of their Australian operations to low-wage centres. But the sharp downturn in global economic fortunes means that big employers like General Motors Holden can now come out and demand straight-out, depression-style cuts to its workers’ wages. The details of the Holden plan to be put to the workers at the Elizabeth plant in South Australia in August are still secret, but the word is that $200 a week will be hacked off the average pay cheque.

Holden workers have been through the wringer before. In 2008, at a previous peak in the global economic crisis, workers’ hours were slashed. But the notion of cuts to the hourly rate has sent ripples throughout industry.

“If we want to build cars in this country, frankly if we want to build anything in this country, we face significant cost penalties. We are one of the highest-cost places in the world, the highest penalty we face is labour costs. We can’t survive as a local manufacturer if we’re not competitive,” Holden managing director Mike Devereux told the media last week. Of course, workers also have to contend with high costs, i.e. the cost of living in Australia, but the corporate media focus is now on what Holden says it needs.

Other manufacturers are applauding. Toyota chief executive Max Yasuda has long been critical of what he claims is the unproductive work culture in Australia. Despite executive disdain for Australian workers, it should be pointed out that local manufacture has survived in face of the historically high exchange rate of the dollar, the almost unilateral slashing of tariffs on cheap imports and the fact that local plants were never going to be able to compete on price with mega-plants overseas producing world cars on a huge scale.

Local operations were built up by the hard work of Australians but, increasingly, vehicle production in the country has been kept going by handouts of taxpayers’ money. The Australian government is far from unique in this. In fact, Australia tails the field in making this sort of “co-investment”. In Australia the per capita assistance given to the auto industry was US$17.80 in 2008/09. In the UK it was US$27.99, in Germany it stood at US$90.37, in the United State it was US$264.81 and in Sweden government assistance reached a staggering $334.18 per head.

Australian wages are not at the top of the league tables, either, but this doesn’t stop GMH pushing the idea that wages are the biggest issue the company faces. The workers’ unions aren’t buying the argument. Labour costs are estimated at less than 20 percent of total costs so a major cut to workers’ pay would result in only a very small reduction, if any, in the cost of a Holden. It will have no impact on the fact that Australians are not buying big cars in the numbers they did in the past.

The car industry and the industries that supply it are major employers. Their collapse would be devastating to local communities in terms of jobs but it is also clear that car production doesn’t have a long-term future here. We need alternatives and this is where public enterprise is essential.

The car industry must be nationalised and re-tooled to produce the infrastructure we need for a sustainable future; we should produce for our own public transport and green energy needs, for example. Profit-hungry transnationals won’t do this for us.

The workers at Holden are in a tough spot. The arguments will be flying that a wage cut will save jobs for themselves and their workmates for a while longer. Bills need to be paid and mortgage repayments met. This is reminiscent of the Fraser government’s notorious wage freeze of the early 1980s. “One man’s pay rise is another man’s job,” was the argument. It was an appeal to workers’ sense of solidarity. In the end, the legally enforced loss of purchasing power exacerbated a recession and caused greater unemployment. The wage cutting strategy applied during the Great Depression worsened that calamity.

Car manufacturers are packing up to leave Australia. Any misguided generosity from Australian workers will simply be pocketed by the transnationals on their way out. Workers must look to their own future. We must fight for a sustainable industry plan.

Next article – Commemoration: Chile, September 11, 1973

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